NFLX Post-Earnings Trade for a fade.

[Yowster 8,047]

Now that NFLX earnings has come and gone, with the stock briefly hitting an all-time high (mostly because of guidance for next quarter rather than this quarter's results) I was looking for a trade to play for a fade in the stock, but without really losing anything if the stock continues upward.   I like our RUT BWC trade structure so I looked at using it for NFLX.   Problem is that the strikes for the June monthlies are in increments of 5 and that is too wide for a BWC structure to have good prices, but Jun2 weeklies are available with strikes in increments of 1.   Not a lot of OI in the Jun2 options yet, but the bid/ask spreads are not bad.   Assuming I can get near mid point pricing, I would be looking to buy a slightly OTM put spread with a width of 2 and sell a farther OTM put spread with a width of 4, doing so for zero cost or a small credit (margin of $200 per allocation).   For example, with NFLX a bit over $143 as I write this - I could buy the Jun2 141/139 put spread and sell the 135/131 put spread for right around even money.   I'll likely let the stock settle for a day or two before entering this trade, but wanted to throw the idea out there now for input.

[semsem24 5]

I am looking at this trade and I am not sure if you opened it or not , now the stock moved higher , I am thinking ..

what would have happened if you opened both sides , the calls and the puts ..the other question is when would you close it

I looked at 145/147 and sell 150/155 and I used TOS on demand for April 26 when the stock was at 150.00 . Have you done this trade and the stock moved in the direction we expected , it just happened too fast , you would have lost 70.00 per spread .

[Yowster 8,047]

3 hours ago, semsem24 said:

I am looking at this trade and I am not sure if you opened it or not , now the stock moved higher , I am thinking ..

what would have happened if you opened both sides , the calls and the puts ..the other question is when would you close it

I looked at 145/147 and sell 150/155 and I used TOS on demand for April 26 when the stock was at 150.00 . Have you done this trade and the stock moved in the direction we expected , it just happened too fast , you would have lost 70.00 per spread .

@semsem24I opened this trade with puts a day or two after this post.  June 2 expiration - 140/138 put debit spread, and 134/130 put credit spread for $0.00.   Stock moved significantly higher, so current position is not worth much, but since I opened for even money all I stand to lose is the few dollars in commissions.  Still has a few more weeks to expiration and would likely close the position on an significant downward move.   Playing both sides would have been a loser on the call side, but I think with NFLX and this type of trade I'd always be going the opposite direction of the earnings move (after giving the stock a couple of days to settle in).